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5 A "Boom" in FDI to LLDCs Hides a Different Story Source: UNCTAD, FDI/TNC database (www.unctad.org/fdistatistics) FDI Inflows to LLDCs, 1990-2007 (Billions of dollars)

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6 Characteristics of LLDC Inflows Share of global 2007 inflows was only 0.8% Concentrated in the oil and natural gas sectors Of $14 billion in 2007, 73% went to Kazakhstan alone $3.8 billion of FDI inflows to the other 30 LLDCs combined in 2007

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11 Opportunities Geography cannot be changed, but institutions and economic focus can. The incentive of an attractive investment climate may outweigh other disincentives. Strategic policy choices may build skills for and attract FDI to knowledge-based services. There is room to liberalize certain sectors in LLDCs, including telecommunications, and attract corresponding capital inflows. Regional economic integration and cooperation, for example through BITs, DTTs and FTAs, can improve effective market size and proximity.

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12 The Way Forward A Two-Pronged Strategy: 1.Mitigate LLDC disadvantages through national and regional measures to improve infrastructure, the investment climate, and access to markets 2.Economic refocus to specialize in goods and services that are of higher value, lower bulk, and more tradable irrespective of location

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13 Mitigating LLDC Disadvantages Upgrading transport and communication infrastructure, possibly with the help of FDI Conducive policies and institutions for FDI entry, establishment and retention "Land-linking" through regional cooperation and integration schemes Public-private partnerships for transport and transit, with financial and technical assistance from the international community